AT&T Inc. (T)’s Pension Cost To Dent Profit In Q4

AT&T Inc. (NYSE:T) will be looking to forget this year’s earnings opening season as a hefty pre-tax loss continues to linger on the horizon. Cnet reports that the giant wireless company could incur up to $10 billion pretax loss attributed to increased pension costs, as well as depreciation in asset values mostly related to copper.

AT&T Inc. (NYSE:T) looks set to incur up to $7.9 billion in costs mostly related to its pension and post-employment plan having already updated its mortality assumptions according to a recent regulatory filing. In the regulatory filing, the giant telecommunication company also indicated that it had decreased the rate at which it measures its pension obligations.

The increased costs have been attributed to the company’s retirees living longer than a decade ago. The Societies of Actuaries has already pointed out that people older than 65 years are nowadays living two years longer than a decade ago. Increased lifespan has resulted in increased contributions for the likes of AT&T Inc. (NYSE:T) than previously estimated in the pension plans.

AT&T is not new to increased costs attributed to its pension plan. Back in 2011 in the fourth quarter, the company incurred a loss of $6.7 billion attributed to how it accounts for its employee pension benefits as well as the breakup fee. Increased costs as a result of pension on the other hand, not the only problem on the table for AT&T Inc. (NYSE:T).

A $2.1 billion in non-cash charge is also looming after AT&T opted to do away with its copper assets that were to be of use for future network activity. A  number of telecommunication companies have been forced to replace their copper wiring  as attention shifts to fiber optic lines that are believed to be highly reliable in reaching longer distances while offering higher data rates.

AT&T Inc. (NYSE:T) revenues should receive a major boost from higher asset gains with consensus estimates of the opinion that revenues will come in at $34.68 billion up from $33.25 billion in the third quarter.

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